With Inheritance Act claims, is it really worth making a Will?

The potential for a dispute over the provisions of a Will can be concerning for anyone who has taken the time to carefully consider what they’d like to bequeath to those that they leave behind.

The question is, therefore, is it really worth making a Last Will and Testament?

What are Inheritance Act claims?

When insufficient or no financial provision has been made for a particular individual under the terms of a Last Will and Testament, that person may be able to make a claim against the deceased’s estate. This is known as an Inheritance Act claim, or more accurately a claim under the Inheritance (Provision for Family and Dependants) Act 1975.

The 1975 Act gives the court a relatively wide discretion, within certain legislative parameters, to vary the distribution of the deceased’s estate so as to make financial provision — such as a single lump sum, regular payments or transfer of property — for relatives and dependants.

Those eligible to make a claim under the Act include the deceased’s spouse or civil partner, or former spouse or civil partner, provided they’ve not remarried or entered into a subsequent civil partnership; anyone cohabiting with the deceased for a period of at least two years prior to the date of their death; any child of the deceased, including adult children; anyone treated as a child by the deceased during their lifetime, including adopted or stepchildren; and anyone else who was financially dependent on the deceased immediately before they died.

The court can make an order where it's satisfied that reasonable financial provision has not been made under the Will. A spouse or civil partner will usually be entitled to such financial provision as is deemed reasonable in all of the circumstances, regardless of whether or not that provision is actually required for their maintenance, whilst other family members or dependants will be entitled to such reasonable financial provision as is deemed necessary.

Is it still worth making a Will?

The legal starting point is that you can leave your worldly assets to whomever you choose, although the 1975 Act provides a safety net for eligible claimants who can show that they require more financial provision than they’re entitled to receive under the terms of any Will.

That said, Inheritance Act claims are not clear cut, where much will depend on the nature of the relationship between the claimant and deceased during their lifetime. The court will also take into account, for example, the financial resources and needs of the claimant, and of any beneficiaries, and the size and nature of the deceased’s estate. The court can even have regard to the claimant’s conduct. This essentially means that a claim will not automatically succeed.

In short, the possibility of a claim, which must usually be brought within just six months of the grant of probate, combined with the hurdles that a claimant must clear to persuade a court to grant their demands, should not deter you from making a Will. In the majority of cases, family members and dependants will accept a testator's final wishes without protest.

It’s also worth bearing in mind that by failing to leave a Will, under the strict rules of intestacy, those that you would want to benefit from your estate may be left with absolutely nothing — leaving them with the overwhelming burden of bringing an Inheritance Act claim. 

Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.

The Importance of writing a Will

Many lessons have been learnt as a result of the recent COVID-19 pandemic, not least the importance of putting in place an up-to-date Last Will and Testament before it’s too late. Being forced to face one’s own mortality has already prompted thousands of us to take legal steps to ensure that our loved ones are adequately provided for in the event of our unexpected death.

 Why is having a Will important?

In so many cases, people have no Will at all, or have a Will in place but one that’s out-of-date.

With modern day families, where second marriages and children from previous relationships are commonplace, the provisions of any existing Will can easily fail to reflect your current personal circumstances. Even though for inheritance purposes, your ex-spouse or civil partner will be treated as if they’d died when your marriage or civil partnership was dissolved, nonetheless, some or all of your estate could then be treated as if you don’t have a Will at all.

By failing to leave a Will, or where your estate is treated as if a Will didn’t exist, under the strict rules of intestacy, your loved ones may be left with nothing. The rules provide that any current spouse or civil partner will automatically inherit all your personal possessions, plus any money or assets up to the value of £270,000, together with half of your remaining estate. The other half will be divided between any children, grandchildren or great grandchildren.

The law in England and Wales essentially means that if your estate is valued at £270,000 or less, the whole estate will pass to any surviving spouse or civil partner, without financial provision for your children or any other dependants. The rules also mean that any unmarried partner, even if you currently live together, will miss out altogether on any intended legacy.

What does a Last Will and Testament do?

A Will is a formal written document setting out how your money, possessions and property, ie; your estate, should be distributed after you die, and in accordance with your wishes. Making a Will is especially important if you have children, or any one else who depends on you financially, or if you’d like to leave something to someone outside of your immediate family.

If you die intestate, everything you own may be divided up in a way that doesn’t necessarily reflect what you’d want, without making any financial provision whatsoever for those that you would otherwise have wanted to benefit from your estate. Absent a well-drafted or up-to-date Will, your family may also find themselves facing a significant inheritance tax bill, a liability that potentially could’ve been minimised through the effective use of tax planning tools.

By seeking expert legal advice from a specialist in Wills, trusts and estate planning, together you can carefully consider the contents of your Will — making provision for your family in the context of their financial circumstances —and ensuring that your final wishes are met. 

Using a Lasting Power of Attorney to safeguard your business

In a world where the unimaginable can and does happen — where sudden illness or injury can leave any one of us mentally incapable of dealing with our own affairs on either a temporary or permanent basis— a Lasting Power of Attorney (LPA) can provide you with the peace of mind that your financial interests will be adequately protected if the worst happens.

For many of us, this will be a case of appointing someone we trust, a family member or close friend, to deal with our property and personal finances. However, for those responsible for running a business — operating as either a sole trader, or via a limited company or partnership — an LPA can help to safeguard the survival and success of that business.

What is an LPA and how does this work?

An LPA is where an individual, described as the donor, appoints an attorney, or more than one attorney, to manage any pressing financial affairs on their behalf in the event that the donor is unable to make decisions for themselves, whether this be in the short or long-term.

Commonly, spouses or civil partners, or cohabiting partners, will appoint each other to act in the other’s interests should either one of them become incapable of making decisions due to mental incapacity. However, LPAs are also commonplace when it comes to risk management in the context of a business, providing a financial lifeline in cases of long-term incapacity or, alternatively, protecting the livelihood of the donor during any short-term incapacity.

However, as a business owner, it’s vital that you carefully consider which individual(s) you’d entrust with decisions about your business. In some cases, this may not necessarily be your other half, not least if they lack the know-how to handle these types of decisions. Luckily, it’s entirely possible, and advisable, to consider making two LPAs with different attorneys: one for financial decisions in relation to your business, and the other to cover your personal affairs.

What are the risks of not having an LPA in place?

The making of an LPA should form part of any crisis management plan to help minimise the risks to your business in the event of critical illness. The risks of not having an attorney appointed under an LPA can be many and varied, from being unable to access business accounts, causing problems with cash flow, to incomplete contracts and disgruntled clients.

Even if you already have an LPA in place, but the intention behind this was for your attorney(s) to solely deal with your personal finances, rather than any business matters, you should act immediately. This is because any current appointed attorneys, in the event of your incapacity, would have the legal authority to make business decisions on your behalf.

By putting in place a separate LPA, specifically designed to deal with the survival and success of your business, this will help to guarantee a financial lifeline and/or livelihood to return to. By securing expert legal advice from an LPA specialist, this can also help to guarantee that the needs of both your business and your personal affairs are adequately met where needed.

Does living abroad stop you from getting a UK divorce?

If your marital relationship has permanently broken down, you may be looking to petition for divorce to enable you to move on with your life — but what happens if you’re living overseas?

Can I get a UK divorce if I live abroad?

The simple answer to this question is “yes”, you can get divorced in the UK, even if you currently live overseas. That said, there are certain statutory requirements that must be met to be able to demonstrate that a court in England and Wales has jurisdiction to entertain proceedings for divorce. There are different rules applicable for Scotland.

Below we look at the basis of these jurisdictional requirements, as set out under section 5(2) of the Domicile and Matrimonial Proceedings Act 1973. However, this is a complex area of law, where expert advice should always be sought from a family law specialist.

What are the jurisdictional requirements?

In order to establish jurisdiction to get divorced in England or Wales, one of the following criteria must apply on the date of application:

•   Both you and your ex are habitually resident in England and Wales

•   Both you and your ex were last habitually resident in England and Wales, and one of you continues to live there

•   The person receiving the petition is habitually resident in England and Wales

•   The person issuing the petition is habitually resident in England and Wales, and has resided there for at least the last 12 months

•   The person issuing the petition is domiciled and habitually resident in England and Wales, and has resided there for at least 6 months

•   Both you and your ex, or either of you, are domiciled in England and Wales.

Domicile is acquired at birth, and is essentially the place where you have, or consider to have, your permanent home, even if you’re not currently living there. This means that you can be domiciled in a different country from the one in which you’re residing, for example, you can be resident in Europe but still domiciled in the UK. However, you can only have one domicile at any given time, where moving to a new country in the long-term, whilst severing all ties with your domicile of origin, may mean that you’ve acquired a new domicile overseas.

Should I get divorced in England and Wales?

Divorce laws differ around the world, where the financial outcome in some countries may be more likely to favour either you or your ex, depending on your circumstances.

In addition to the types of financial orders that the court is likely to make, the country in which you divorce can also have a significant impact on other important factors, such as the costs involved, the length of time it takes to get divorced, any arrangements for children, and how easy it is to enforce orders made by the court.

It can therefore be best to seek legal advice at the earliest possible opportunity, in this way allowing you to explore the benefits and drawbacks of your jurisdictional options, not least before your ex issues proceedings first. Becoming embroiled in a forum dispute can be costly and time-consuming, which is highly unlikely to be in anyone’s best interests.

Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought. 

What to do if you’re denied access to your child

Sadly, it’s not uncommon for disputes to arise over child contact arrangements, where being denied access to your child can be heartbreaking, both for you and them. However, there are steps that can be taken to resolve any dispute that you have with the parent or guardian with care, ensuring that you’re able to maintain regular contact with your child moving forward.

Try to reach an agreement

Even if you have parental responsibility for a child but you do not live together, it does not mean you have an automatic right to spend time with them. There is no immediate legal right to contact for a parent. That said, a court will usually grant the non-resident parent access, unless there’s clear evidence that this will be detrimental to the child’s welfare.

In some cases, a carefully worded letter, explaining your point of view, as well as the view the court is likely to take to access, can help to persuade your ex to see your perspective, and to accept that continued contact is in the child’s best interests. By seeking expert advice from a family law specialist, your advisor can help to set out the legal position in writing, together with reassurance in respect of any concerns that your ex may have over granting you access.

If agreement can be reached in this way, your solicitor can draft the terms of that agreement in writing and ask the court to approve those terms. In this way, the agreement will become legally binding. Provided the court accepts that the terms of any consent order are in the child’s best interests, the order will be approved without the need for a court hearing.

Where the matter cannot be resolved informally or by way of an approved consent order, you may instead wish to invite your ex to try mediation, in this way helping you both to reach an out-of-court agreement that is acceptable for everyone without recourse to the litigation.

Apply for a Child Arrangements Order

If you’re unable to agree to contact, you can ask the courts to decide at a hearing. If this happens the result will be a Child Arrangements Order. This is a court order stipulating who has primary care of the child, and the nature of any contact with the non-resident parent or wider family members. However, except in certain cases, for example, involving domestic abuse, the court will want to see that you’ve at least attended a meeting about mediation first.

When a court determines any question with respect to the upbringing of a child, the child’s welfare will be the court’s paramount consideration. Here, a range of factors will be taken into account including the needs and wishes of the child, the capabilities of each parent in meeting those needs, as well as any harm that the child may have suffered or be at risk from suffering. In the absence of any safeguarding concerns, the courts will actively encourage a relationship between the child and both parents, even if objections are raised by your former partner.

A family law specialist experienced with dealing with these types of applications can help to prepare any case on your behalf, helping to ensure that an order is made in your favour for continued contact with your child. By having a well-prepared case, this can go a long way towards effectively defending any challenge raised by the parent or guardian with care.

Enforce a Child Arrangements Order

If you already have a consent or court order in place, but your ex is not keeping to the terms of that order, it’s often best to see if the matter can first be resolved informally. In many cases, this will be in the best interests of all those involved, including your child, especially where the breach or breaches of any order are relatively minor.

Legal advice should be sought as soon as possible so that every attempt can be made to resolve the matter without further recourse to the courts. However, as a last resort, there are legal steps you can take to ask the court to enforce its terms. Your legal advisor can also advise on all other available options, including further family mediation.

Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.

How do you value an estate for inheritance tax purposes?

If you’re acting as an executor of a deceased’s estate, an important part of your responsibilities will be to value any assets that form part of that estate for inheritance tax (IHT) purposes. Whether or not there’s IHT to pay, this will affect how you report the estate’s value, and the deadlines for reporting and paying any tax. This can often be a complex process, not least where the deceased owned various different types of assets at the date of death.

Below we look at the steps involved to work out the value of someone’s estate.

Step 1: Work out the market value of all the assets

When valuing someone’s estate, ie; the money, property and possessions of the person who’s died — you should start by estimating all the things the person owned with a monetary value, whether jointly held or in their sole name. You will need to add these up to get the ‘gross value’ of the estate. This can include things like their home, savings, stocks and shares, vehicles, jewellery, pension payouts, life assurance, and money they’re owed, such as wages.

You should be able to value some assets easily, for example, money in bank or building society accounts. In other instances, you may need the help of a professional valuer, for example, a chartered surveyor to assess the open market value of the deceased’s home.

Step 2: Deduct any debts, reliefs and exemptions

Having established what debts were outstanding at the date of death and deducted these from the gross value, this will give you the ‘net value of the estate’. This not only includes any debts and unpaid bills the deceased person still owed, but also any funeral expenses.

In addition, you will need to deduct any reliefs that apply to agricultural assets, businesses and business assets, as well as the value of any assets left to spouses, civil partners, charities or that are exempt for other reasons. The figure that you’re left with will give you the value of the estate that’s taxable. This is known as the ‘chargeable estate’.

Step 3: Work out the available inheritance tax threshold

You will need to take the basic threshold of £325,000. Everyone in the 2021-22 tax year has a tax-free IHT allowance of £325,000, known as the nil-rate band, together with a residence nil-rate band of £175,00 where applicable. You can also take any unused thresholds transferred from a late spouse or civil partner’s estate.

Step 4: Compare the value of the estate with the available threshold

You will need to compare the value of the chargeable estate with the available threshold(s). If the value of the estate is less, there’s no inheritance tax to pay. If it’s more, IHT will be due on the excess, typically at a rate of 40%. Once you’ve got all your information and figures together, you will need to report the estate’s value in detail to HMRC.

Step 5: Secure expert advice from a probate specialist

Whilst valuing the estate of someone who has died has been broken down into these relatively simple steps, the rules can become complicated, not least if substantial gifts were made within seven years of the date of death as this reduces the basic IHT threshold, or where assets were given away but for which the donor retained some benefit. The terms of the will can also affect how much tax is payable and who pays it when there are tax-free gifts or items left in trust.

If in any doubt whatsoever, prior to reporting the estate’s value to HMRC, expert advice should be sought from a probate specialist. The financial implications of valuing an estate incorrectly can be significant, particularly if the deceased’s estate is subject to inheritance tax. By securing the advice and assistance from a legal professional, this can give you the peace of mind to move on to the next stage in the process: applying for probate and administering the estate.

Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.

What is judicial separation?

If you’ve recently separated from your spouse or civil partner you may be considering divorce or dissolution of your civil partnership. However, for some couples, this is not necessarily the best way forward. Instead, if you’re choosing to live apart but are still looking for the court to decide how your finances will be divided, you can apply for a judicial separation.

What does judicial separation mean?

A judicial separation is a legal separation which is sanctioned by the court in England and Wales. This allows couples to live apart without bringing their marriage or civil partnership to an end. It ratifies the separation, and with the exception of pension sharing, it will enable the court to make financial orders similar to those made on divorce or dissolution.

When can you apply for judicial separation?

You can ask the court to sanction a legal separation for the same reasons you could file for a divorce or apply to dissolve a civil partnership, although you will not be required to show that the marriage or civil partnership has irretrievably broken down. The grounds for separation, as with divorce or dissolution, include adultery, unreasonable behaviour, desertion for a period of at least two years, two years' separation with consent or five years' separation.

How does judicial separation differ to divorce?

Unlike divorce or dissolution of a civil partnership, you do not need to prove irretrievable breakdown of the marriage or union, and you will not need to be married or in a civil partnership for more than one year to be eligible to apply. Further, whilst a divorce or dissolution require two decrees from the court — a decree nisi and absolute, or a conditional and final order — a legally sanctioned separation requires one decree of judicial separation.

Once a decree of judicial separation has been granted, you will no longer legally be a couple or required to cohabit, but you will remain married where, unlike divorce or dissolution, you will not be permitted to remarry or enter into a new civil partnership.

When is judicial separation appropriate?

There are several reasons why judicial separation may be appropriate, including where one or both parties have religious or moral objections to divorce or dissolution. In other cases, judicial separation may be preferable to officially bringing a marriage or civil partnership to an end because a year has not yet passed since the wedding or civil ceremony. Conversely, more time may be needed to consider whether divorce or dissolution is the right decision.

Indeed, for those who decide to wait it out before getting divorced or dissolving their civil partnership, instead using judicial separation to regulate their finances in the interim, new legislation is set to revolutionise the way in which couples can apply for divorce or dissolution.

When is the new law due to come into force?

The Divorce, Dissolution and Separation Act 2020 is due to come into force on 6 April 2022. This removes the requirement to establish any facts before being granted an order. Rather, all that will be required is for one or both spouses to provide a legal statement to say the marriage or civil partnership has irretrievably broken down, in this way making it easier and less acrimonious to bring a divorce or civil partnership to an end. Equally, once the new provisions come into force, parties applying for judicial separation will not be required to establish any one of the five factual grounds.

For more information on judicial separation, divorce or dissolution of a civil partnership, expert advice should be sought from a family law specialist.

Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.

Are prenuptial agreements legally binding?

Prenuptial agreements are becoming increasingly popular in the UK. Although prospective spouses rarely enter into a marriage anticipating that their union will end in divorce, more and more pragmatic couples are anxious to plan for this possibility — typically to protect inherited wealth or pre-marital property on any future breakdown of the relationship. 

Still, entering into a prenuptial agreement doesn’t necessarily guarantee protection over any assets acquired either prior to or during the course of the marriage, least of all where both parties have not sought independent legal advice before entering into this type of agreement.

Below we look at what a prenup is and how this works, and what requirements need to be met to help maximise the prospects of an agreement being upheld by a court on divorce.

What are prenuptial agreements and how do these work?

A prenuptial agreement is a legal contract that sets out how any assets and financial resources should be divided between a couple if the marriage were to breakdown. This is an agreement that is entered into prior to the marriage taking place, although it’s also possible to enter into a similar agreement after the event. This is known as a postnuptial agreement.

In either case, the agreement sets out a couple’s rights regarding any property, income and other assets acquired both individually and jointly. In this way, the agreement is designed to provide the parties with clarity and certainty around the financial arrangements should they ever separate, thereby reducing the risk of acrimonious or protracted divorce proceedings.

What are the rules relating to prenuptial agreements?

Under UK law, a prenuptial agreement is not automatically legally binding, where the parties to the agreement cannot override the court's discretion to decide how to redistribute their assets and income on an application for financial remedy. That said, the court must give appropriate weight to a prenuptial agreement as a relevant factor under the Matrimonial Causes Act 1973, in some cases, even decisive weight, depending on the circumstances.

In accordance with the guidance from the Supreme Court in the case of Radmacher v Granatino [2010] UKSC 42, the court should usually give effect to a prenuptial agreement that is freely entered into by each party with a full appreciation of its implications, unless in the circumstances prevailing it would not be fair to hold the parties to their agreement.

Should legal advice be sought for prenuptial agreements?

The manner in which a prenuptial agreement is entered into will play a crucial part in how much weight the agreement is given by the court, where seeking independent legal advice will amount to strong evidence of a party's understanding of its implications.

In its assessment of fairness, various other factors will be taken into account by the court, including the welfare of any child(ren), the duration of the marriage, the responsibilities undertaken and assets acquired during the course of the marriage, and the future needs of both parties. Still, by securing the services of a family law expert before you get married, this will give your prenup the best chance of being upheld in the event of divorce.

Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.

Congratulations to James

James Aird qualified as a Solicitor at Blackhurst Budd as of 30th September 2021.

James will specialise in litigation matters and has a wide range of experience ranging from landlord and tenant matters to contentious probate and commercial disputes. He has also worked in the niche area of fire safety law alongside Managing Director Warren Spencer.

James started his two-year training contract with the firm in 2019 and completed his Legal Practice Course at the University of Central Lancashire in 2020.

Managing Director Warren Spencer commented:

“Congratulations to James on qualifying as a Solicitor. His success is well deserved and is the result of many years of hard work and dedication at university, in post-graduate legal studies, as a paralegal and finally through his training contract. I wish him the best of luck as he moves forward in the next stage of his career.”

James Aird added:

“I’m delighted to have completed my training contract and to have been offered a role within Blackhurst Budd. I am looking forward to expanding my experience further and developing a wider range of legal services for clients throughout Blackpool and the Fylde Coast.”

Congratulations to Tom

Tom Fielding in our property department has made the shortlist for a national award at the 2021 Modern Law Conveyancing Awards. Tom, who qualified as a Solicitor in March of this year, has been shortlisted in the 'Rising Star of the Year' category.

Briony Haley, Head of Property commented:

"We're thrilled that Tom's efforts over the last 12 months have been recognised. During a challenging year the feedback we have received from clients and introducers working with Tom has been exceptional. In addition to this he has assisted in business development activity and is also now taking on commercial property transactions."

Tom added:

"I only found out recently that I had been nominated by the firm and to be shortlisted against so many great individuals and law firms is amazing. Fingers crossed for the ceremony!"

The winners of the awards will be announced on 25th November 2021 at the Rum Warehouse in Liverpool.